BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.
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50 | BROADBAND COMMUNITIES | www.broadbandcommunities.com | JANUARY/FEBRUARY 2017 FINANCING M ost readers of this magazine know about tax increment financing, in which a taxing entity, such as a city, county, state or special district, makes a loan or issues bonds to pay for all or part of a project. e taxing entity promises to repay the debt with a fraction of the increased tax revenues expected from the results of the project. e tax revenues usually come from property taxes, which rise because the properties around or served by the project go up in value. As data shows a positive impact of FTTH networks on real estate values, several communities in the last few years have used tax increment financing for FTTH networks. Tax increment financing may also involve sales taxes and other transaction-based sources when a project is forecast to increase the volume and value of transactions. Work by Strategic Networks Group suggests that an increase in transactions may flow from an FTTH network. As such transactions are not limited to private buyers and sellers, the revenue pledged to finance a network will not necessarily come from a sales tax. Increased transactions may also include fee- based government services that a network makes faster, better and cheaper. Examples might include building permits, fishing and hunting licenses and admissions to government recreation or parking facilities. Cost reduction financing is similar in concept: A government entity that uses an FTTH network to reduce costs promises to repay debt from a fraction of those savings. e most obvious savings, often cited as arguments for building FTTH networks, are direct reductions in spending for voice, video and data services. ACCOUNTING FOR COST REDUCTIONS In addition to reducing telecom spending, an FTTH network can make many other governmental activities faster, better and cheaper. Citizens often pay to achieve faster service; think of all the rush fees for expediting government processes. "Better" is often a harder sell, in part because the economic value of better service often shows up later or in another context. Better schools, for instance, might result years or decades later in lower unemployment, less Cost Reduction Financing For FTTH Networks Communities can finance fiber-to-the-home networks by applying the cost reductions that the networks make possible. By Rollie Cole / Sagamore Institute for Policy Research Learn more about new methods for financing fiber at the Broad B and Communities s ummit , May 1–4, 2017, in Dallas.